Your Business Needs a Digital HR Strategy. Here's How to Create One.

Posted by Muhammad Talha on Apr 15, 2022

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The world is currently going through the fourth industrial revolution. Human productivity has reached an all-time high thanks to developments in artificial intelligence, the Internet of Things (IoT), and robotic process automation (RPA). Today, technology has penetrated all areas of business, including human resource management. A digital HR strategy is no longer just a nice to have if a business wants to remain productive and competitive.

A digital HR strategy is a roadmap that guides the digital transformation of manual HR processes. The general goal of such a strategy is to digitize and automate — and, thereby, improve — key HR functions, such as recruitment, onboarding, and workforce management.

Digitizing your HR processes takes time, but it can lead to improved productivity, reduced costs, and even higher employee engagement. That said, it warrants carefully planning out a strategy that takes your company’s requirements and future HR needs into account to avoid wasting resources in the wrong places.

How to Create an Effective Digital HR Strategy

Creating a digital HR strategy sounds intimidating and overwhelming. But taking small, incremental steps will help you build a solid plan without overcomplicating things.

Set a Clear and Measurable Goal

Your strategy needs at least one goal to effectively guide the digital transformation of HR in your organization. Whatever you decide needs to align with your broader business goals. Otherwise, you’ll be focusing on the wrong areas to digitize instead of the ones that will actually help generate some returns for your business. Focus on high-level, impactful goals, such as:

  • Reducing HR costs: Manual, repetitive tasks are time-consuming and expensive. For example, the average cost of manually entering HR data is $4.51 per entry. Automating that process alone would lead to a significant reduction in business costs.
  • Increasing the productivity of HR: By automating mundane administrative tasks, your HR team would have the time to focus on impactful initiatives, such as overhauling the training program.

From there, you can get a little more specific with your goals. For instance, your digital HR strategy could aim to cut down the use of paper by, say 35%, by digitizing your employee documents.

Identify Opportunities for Digital HR Transformations

Make a list of the different HR processes in your organization that could be automated. Focus on the areas that would help you achieve the goal(s) you set in the previous step to justify the digitization. Here are a few examples of manual tasks that can easily be transformed into digital processes:

  • Pre-screening job candidates (with an applicant tracking system)
  • Onboarding new hires (with an electronic onboarding tool)
  • Tracking training progress and goals (with a learning management system)
  • Enrolling in benefits plans (with a self-service benefits administration platform)
  • Submitting, approving, and rejecting time-off requests (with an employee communications tool)

Determine the impact of automating those processes and prioritize accordingly. If your goal is to reduce costs, see which of your HR processes are taking up the most time and manpower. For example, if manually running payroll takes two full days, consider automating this task with payroll software. Or you may need an integrated human capital management (HCM) system for more complex tasks.

Describe Your Ideal HR Technology Stack

The next step is to determine what tech you’ll need to automate and digitize your HR functions, depending on your objectives and the opportunities you discovered.

This entails describing your solution requirements. Get feedback and buy-in from employees across the entire organization, as they’ll be the end users of whatever HR solutions you do pick. For instance, requirements for an LMS could be that it has to:

  • Be user-friendly to increase training participation
  • Support custom learning tracks
  • Support the creation of custom training classes
  • Offer analytics capabilities to track training progress

Your strategy should have clear-cut descriptions of all the digital HR solutions you’ll need. They’ll help you later with your search for the best HR platforms.

Keep in mind that these requirements may change over time. You’ll need to continuously get feedback from your employees to see if they are satisfied with your current HR tech stack. In addition, you’ll also need to anticipate your future requirements. If an existing solution isn’t able to keep up with those changes, see if your vendor can do something about it, or else look for another platform.

The “Why” Behind Implementing a Digital HR Strategy

HR digital transformation improves organization-wide efficiency and equips you to make better decisions, thanks to consolidated data. These huge benefits make it tempting to rush into it without a solid plan or framework in place. A digital HR strategy will ensure that you focus on the right areas, future-proof your tech, and deliver a pleasant experience for your employees.

Serves as a Firm Roadmap for Digital HR Transformation

The biggest advantage of implementing a digital HR strategy is that it keeps you laser-focused. The entire team is aligned on the goals and the requirements of the digital HR transformation in your organization. As a result, you get the clarity and confidence to make executive decisions to choose a particular platform or digitize a certain HR process. You can focus on the right areas and make worthwhile investments in technology solutions that will help you get closer to achieving your goals.

Consider an example where your goal is to reduce costs. Your digital strategy will be to target manual HR processes that are the most expensive and pick a digital tool that will actually help you save money in the long run. In other words, you won’t digitize any process or choose to buy any software unless it helps you cut down on your business costs. Everything else — user-friendliness, cutting-edge features, etc. — is secondary. That way, it’s also easier to get buy-in from other people in your company for whatever decisions you make.

Helps Your Business Weather Change

A sound digital HR strategy helps you create a firm foundation for your HR tech stack by considering your current requirements and anticipating your future needs. It helps you avoid making shortsighted and reactive investments in technology that isn’t scalable and only meets your requirements for the time being. With a solid foundation, you don’t have to completely revamp your tech stack any time your requirements change. Instead, you keep strategically adding to your HR toolbox, growing existing solutions, or integrating new ones as you see fit.

For instance, consider a business that plans on significantly scaling their team in the near future. They have a digital HR strategy that accounts for this anticipated growth in human capital. As a result, they opt for an integrated and scalable HCM system that would comfortably help them recruit, onboard, train, and manage the influx of new employees.

Without a digital HR strategy, they would have risked not considering this change when building their tech stack. They’d be left with a disjointed solution that would have been difficult to scale, resulting in inefficiencies and unnecessary costs.

Improves the Employee Experience

Your digital HR strategy accounts for the specific requirements and expectations of your employees. As mentioned earlier, your digital HR strategy should clearly define what your ideal tech stack looks like from a user’s (i.e., your employee’s) perspective. After all, they’re the end users of whatever HR tech your company chooses to acquire. They’ll feel happier and more engaged when their opinions are heard, and they’re provided with solutions that offer the best user experience.

As a result, your employees will be motivated to put their best foot forward. This overall boost in employee experience — which is crucial in times when turnover rates are at an all-time high — will ultimately lead to better business outcomes and higher profits.

For a Successful Digital HR Transformation, Build a Digital Culture!

The key to successfully implementing a digital strategy for HR is a culture that supports and embraces new technology. This is an ongoing effort. But it begins by simply encouraging everyone — including your leadership — to use your HR solutions and have a digital-first mindset.

Ensure that your employees have the resources and support they need to thrive during and after this digital transformation process. Help them comfortably onboard and take advantage of your digital tools with training material and support from your vendor(s).

Topics: Human Capital Management

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